Crook v. Kaneb Pipe Line Operating Partnership, L.P.

United States Court of Appeals
For the Eighth Circuit

__________

No. 99-3248
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Genon Crook, Personal Representative *
of the Estate of KENNETH E. CROOK, *
Deceased, *
*
Plaintiff-Appellant, *
*
v. * Appeal from the United
* States District Court
KANEB PIPE LINE OPERATING * for the District of Nebraska
PARTNERSHIP, L.P., a Kansas *
Partnership, FARMLAND INDUSTRIES, INC., *
a Kansas corporation; and FARMER’S *
COOPERATIVE BUSINESS ASSOCIATION, *
a Nebraska corporation, *
*
Defendants-Appellees. *

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Submitted: May 12, 2000
Filed: November 7, 2000
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Before McMILLIAN, BRIGHT, and WOOD, Jr.,1 Circuit Judges.
__________

WOOD, Jr., Circuit Judge.

1
The Honorable Harlington Wood, Jr., United States Circuit Judge for the
Seventh Circuit, sitting by designation.
 Kenneth E. Crook, a resident of Nebraska, was killed as a result of a propane

gas leak and explosion on October 11, 1994, at his place of employment, Farmer’s

Cooperative Business Association (the “Coop”), a Nebraska corporation.2 Crook’s

estate sued the Coop, Kaneb Pipe Line Operating Partnership, L.P. (“Kaneb”), a

Delaware corporation with its principal place of business in Kansas, and Farmland

Industries, Inc. (“Farmland”), a Kansas corporation with its principal place of

business in Missouri. Kaneb, a common carrier, piped the propane to Farmland.

Farmland, as part of its business, in turn sold propane gas to its customers, one of

which was the Coop.

Plaintiff filed in state court but the case was removed to the United States

District Court in Nebraska by defendants Kaneb and Farmland based upon diversity

of citizenship. The district court found that defendants were entitled to judgment as

a matter of law upon determining there were no genuine issues of material fact.

I. BACKGROUND

The circumstances surrounding the explosion are not contested by the parties,

only liability.3 The Coop was a fairly large corporation which maintained facilities

2
The Coop was named as a defendant as required by Nebraska law to protect
its subrogation interests resulting from a worker’s compensation settlement.
3
The district court’s decision granting the defendants’ motions for summary
judgment and dismissing the estate’s suit with prejudice fully and carefully

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at several different locations in Nebraska. It had its own liquified petroleum gas

products department and a full-time department manager to supervise Coop

employees who dealt with propane. The propane was purchased from Farmland by

the Coop, partly for its own use, and partly for resale in the regular course of the

Coop’s business to residential, agricultural, and industrial consumers. The Coop, in

the three-and-a-half months prior to the explosion, had purchased approximately

494,000 net gallons of propane.

The Coop maintained two 18,000-gallon bulk propane storage tanks for the

propane, which would then be pumped into delivery trucks for retail sale. The bulk

tanks also supplied propane to two 1,000-gallon supply tanks that fueled the Coop’s

grain dryer. A separate high pressure, underground propane pipeline approximately

300 feet long ran from the supply tanks to the grain dryer. The line came out of the

ground approximately 50 feet before it reached the dryer.

This propane line had been regularly pressure-tested by Coop employees each

year up to and including 1993. However, without explanation, this line was not

pressure-tested in 1994, the year of the explosion. In the past, the Coop had also

checked the propane line for leaks with hand-held, electronic leak detectors, but

considered the facts which it set forth in greater detail. See Crook v. Farmland
Indus., Inc., 54 F.Supp. 2d 947, 948-56 (D. Neb. 1999).

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discontinued their use prior to October 1994 because of the expense. The estate

points out that a reliable electronic gas detector similar to a smoke detector was

available prior to the accident, but not acquired for use by the Coop.

The explosion occurred at the Coop’s Gresham facility where the decedent

had been employed as the branch manager since 1987. He had worked for the Coop

for 28 years. From 1975 to 1987, he had been branch manager at another of the

Coop’s facilities. One of his duties as branch manager was to develop training

programs for employees under his supervision, depending on the requirements of the

employee’s particular position. The training program included employee Dan

Noble, who for the past 22 years had been responsible for the use, hauling, and

handling of propane gas. Noble served as the Coop’s propane delivery truck driver

and advised the Coop’s customers as to the characteristics of propane and ethyl

mercaptan. The Coop regularly sent Noble to safety seminars relating to the use and

handling of propane.

Propane gas is a fuel which is used for both vehicles and a variety of

appliances, such as barbeque grills, water heaters, and grain dryers. Liquid propane

is stored under pressure in a tank or cylinder and is generally vaporized from a

liquid to a gas before it leaves the container. Because liquid propane is odorless,

colorless, and highly flammable, federal regulations, 29 C.F.R. § 173.315(b)(1), and

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the Nebraska fire code required Kaneb, as a propane shipper, to place an odorant

into the propane as a means of identifying a propane leak. The most commonly

used odorant is ethyl mercaptan, which is used by ninety-five percent of propane

sellers and shippers, and which was used in this case. This additive gives propane a

distinctive smell which warns of the presence of propane. However, this odorant

has limitations. Propane gas leaking from buried gas lines may lose its odor as it

passes through the soil, thereby losing its effectiveness. This is known as odorant

fade, which is what happened in this case.

Propane is heavier than air and does not dissipate as rapidly as natural gas,

which, when leaking, may initially cause the propane to collect at low areas, such as

basements. The underground pipeline connecting the storage tanks to the grain

dryer apparently leaked propane which collected in the basement area of the Coop’s

nearby office building. Although some of the Coop employees were in and out of

the basement on the morning of the explosion, no one detected any odor.

Nevertheless, a little later in the day, a spark ignited the propane and caused an

explosion, resulting in the death of the decedent. There is no disagreement that it

was a case of odor fade. Nor is it disputed that the leak occurred around the threads

in an underground pipe coupler, which was used to connect the two 1,000-gallon

tanks to the grain dryer.

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 At this point, as we approach the issue of liability, the estate and the

defendants disagree. The issues after the district court hearings became condensed

into two liability theories, negligence and strict liability. More specifically, as stated

by the estate, the two remaining issues are: first, whether “the district court erred in

finding that the Coop and Kenneth Crook knew or should have known of the

dangerous condition of the product and methods available to protect themselves,”

and secondly, whether “the district court erred in granting summary judgment in

favor of defendants Kaneb and Farmland by finding they had no liability under

Nebraska law if the Coop and Kenneth Crook knew or should have known of the

dangerous condition of the product and methods that were available to protect

themselves.” This requires us to examine the basis of the district court’s finding that

the Coop and the decedent knew or should have known of the propane’s dangers,

and the district court’s interpretation of applicable Nebraska law. The other

available method of propane leak detection as alleged by the estate will be

considered separately.

The “knew or should have known” issue requires some factual review of both

the warnings given by the defendant and the knowledge of the decedent.

We have already mentioned the decedent’s long-term employment by the Coop and

his duties as branch manager, including the responsibility for training the other four

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employees at the Gresham facility. One of those employees under his direct

supervision was Dan Noble, who was the “Propane and Grain Serviceman.” Noble

was responsible for hauling and handling propane gas for over 22 years. When first

hired in 1976, he was instructed about the characteristics of propane. He knew it

was pressurized, could not be detected without an additive to give it a detectable

odor, would settle in low areas, and was dangerous if not handled properly.

In all, it was understood that propane could be a dangerous business, partly

because of odor fade. Noble passed his knowledge of propane on to the Coop’s

customers. In addition to his long on-the-job training, he had attended a number of

seminars since 1977 concerning the characteristics of propane and the problem of

odor fade. Although the district court found that Noble was certified by the

National Propane Gas Association as a specialist in the installation of propane

piping, Noble’s deposition was not clear about this certification. The estate argues

Noble’s deposition testimony was misleading and not sufficient for an undisputed

finding of fact upon which to grant summary judgment. However, whether Noble

was actually certified as to propane pipe installation or not is immaterial, as it is

uncontested that he attended yearly propane safety seminars. Noble and several

other employees were members of the Nebraska Petroleum Marketers, Inc., and/or

the Nebraska Propane Gas Association. In 1993, Noble and three other Coop

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employees attended a hazardous materials training workshop jointly-sponsored by

those organizations. Noble also attended a two-day “Revised Certified Propane

School” in February 1994 and a three-day “LP Gas School” in March 1994.

The record provides sufficient evidence that Noble had worked with the

decedent on propane matters and discussed propane hazards, which included odor

fade. Adding to their propane knowledge were safety mailings routinely distributed

by Kaneb to shippers, customers of shippers, and carriers who received propane

from Kaneb. The Coop received those materials as did Farmland.

Kaneb’s packets contained extensive warnings about propane, including warnings

that propane is “EXTREMELY FLAMMABLE,” may “ignite

EXPLOSIVELY,” and could be ignited by different sources, including “open

flames, smoking material, electrical switches, pilot lights, sparks caused by friction,

etc.” (emphasis and capitalization in original). The warnings about odor fade were

clear and stated, “THERE IS NO SINGLE ODORANT, OR ODORANT BLEND,

KNOWN WHICH GIVES AN EFFECTIVE WARNING OF THE PRESENCE OF

A PROPANE GAS LEAK IN EVERY POSSIBLE CIRCUMSTANCE” and that

there is a “RISK OF DEATH OR A VERY SERIOUS INJURY CAUSED BY A

PROPANE FLASHFIRE OR EXPLOSION.” (emphasis and capitalization in

original). The packet also specifically warned that propane leaking from buried

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lines could lose its odor as it passed through the soil, as the soil absorbs the

mercaptan odorant molecules. It also explained that under certain circumstances,

not everyone is able detect the odor of ethyl mercaptan, even if the odor has not

faded. For example, a common cold could affect a person’s ability to detect the

odor. The warnings stressed, “A leak can exist even if there is no smell of gas.”

(emphasis in original). The use of gas detectors was suggested.

The warning literature was designed to not be easily ignored. Included in the

safety packet was a “Safety and Warning Information Booklet for Propane Users,” a

glossy red and black booklet with multiple-type faces and boxed warnings, pictures,

and diagrams, a pullout poster, and other photographs of fires and explosions. The

record indicates that the Kaneb safety packets received by the Coop in 1992 and

1993 were placed on Mr. Crook’s desk, and that he opened all of his mail himself.

In addition, Kaneb’s bill of lading, which accompanied each and every delivery of

propane to the Coop, featured a “SEE REVERSE SIDE FOR ODORANT

WARNING” on the front and a large-type, bold-face paragraph on the back which

detailed the dangers of odor fade. In case of a suspected propane problem, the

Coop was to call a trained professional.

II. DISCUSSION

These warnings impress us as extensive and sufficient, but the district court

9
thought it unnecessary to reach the question of the adequacy of the warnings since

those warnings might be at issue in other cases. We also see no need to come to a

conclusion about the adequacy of the warnings as a separate issue, and we view the

adequacy of the warnings only within the factual circumstances of this particular

case, not in other circumstances. Whether the warnings would be adequate for

inexperienced newcomers to the propane business we do not know, but combined

with the experience and knowledge of Noble and the decedent, they are adequate.

Under Nebraska law, a corporation is bound by the knowledge possessed by its

employees or agents. Grote v. Meyers Land & Cattle Co., 485 N.W.2d 748, 756-

57 (Neb. 1992). Therefore, the knowledge of Noble as well as the decedent is

imputed to the Coop.

Although we conclude that the warnings given in the particular circumstances

of this case were adequate, as the district court found, under Nebraska law, no

warnings of any kind are required in these circumstances because the defendants

already knew or reasonably should have known of the dangers of propane. See

Strong v. E. I. DuPont de Nemours Co., Inc., 667 F.2d 682, 687 (8th Cir. 1981).

See also W. Page Keeton, et al., Prosser and Keeton on Torts § 99 at 697 (5th ed.

1984); RESTATEMENT (SECOND) TORTS § 388 & cmt. k (1965). Based on its

analysis of the RESTATEMENT § 388, the panel in Strong determined that “there is

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no duty to warn if the user knows or should know of the potential danger, especially

when the user is a professional who should be aware of the characteristics of the

product.” 667 F.2d at 687 (citations omitted). Noble, the decedent, and the Coop,

claimed by plaintiff not to have been adequately warned, were experienced

professionals in dealing with propane. This rule of the “sophisticated user” is no

more than an expression of common sense as to why a party should not be liable

when no warnings or inadequate warnings are given to one who already knows or

could reasonably have been expected to know of the dangers of propane.

Otherwise, it would be an effort to shift liability to one who had no duty to act. We

expect the law in ordinary circumstances to apply a common sense rule. We need

not again review the evidence, which, as we have stated, is sufficient to show

knowledge of the dangerous properties of propane of the Coop, Noble, and the

decedent.

The estate argues that there must be a showing of “actual knowledge” on the

part of the Coop, Noble, and the decedent. Indeed, the evidence not only indicates

those parties “should have known” of the possible dangers, but they could

reasonably be viewed as having had “actual” knowledge as experienced

professionals in the propane business. There were adequate warnings of “odor

fade.” The estate characterizes these warnings as “inadequate and misleading,” but

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it does not illustrate, or point out how the warnings could have been made adequate.

The defendants’ evidence is not required to be “crystal clear” as the estate

suggests, and the estate offers no admissible evidence to the contrary.

The estate also argues that “knew and should have known” of the dangers

was not the correct standard, asserting that the inquiry should have been: “Did the

Coop, Noble, and the decedent have such ‘specialized’ knowledge as to relieve

Kaneb and Farmland from the duty to warn?” However, the estate concedes that

this argument was not raised in the district court, and is therefore waived. In

addition, even were it to be considered, the evidence fairly considered can

reasonably be viewed as showing that the Coop, Noble, and the decedent had

“specialized” knowledge. Also, even had Kaneb and Farmland had a duty to warn,

if a user is already aware of the dangers, the lack of warning is not the proximate

cause of the injury. See Strong, 667 F.2d at 688 (citations omitted).

The estate further argues that a disclaimer on Farmland’s sales contracts with

the Coop, which stated that the Coop “is familiar with the properties of [propane]

gas products and safe methods of handling them,” should be given no evidentiary

weight. To the contrary, the evidence suggests that the disclaimer is a true

statement. The estate argues that “a warning must be designed to reasonably attract

the attention of the user, give a fair indication of the specific risk involved and be of

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an intensity commensurate with the magnitude of the risk involved.” The estate

maintains that a genuine issue of fact exists as to whether or not Kaneb met the

criteria it claims are required. A mere review of those warnings is enough to answer

that assertion, which is based on little more than argument, without any admissible

evidence. The estate does not suggest how the warnings could have been

specifically improved to meet its stated criteria. If the record indicated that the

warnings misled the decedent by minimizing the dangers that would be a different

issue. However, the warnings were not underplayed or obscure, but were plain and

forceful. There was no admissible evidence to the contrary.

The estate also argues that Noble and the Coop were “not aware of the

availability of a reliable, reasonably priced gas detectors prior to the accident.”

However, in its warning literature, Kaneb advised clients to consider the installation

of electronic gas detectors as an extra measure of safety in case of gas leaks, noting

that “Underwriters Laboratory-approved electronic hydrocarbon detectors designed

for the detection of LP-gas in the home. . . . that emit a loud, shrill horn sound are

now on the market a reasonable price.” Kaneb also recommended that “[g]as

detectors should be located near ground level to increase the likelihood of detection

of escaping propane.” That there was a gas detector on the market the Coop did not

utilize, as unfortunate as that may have been, does not create liability.

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 The record clearly shows that the Coop and Noble were aware of, and had

used, at least one type of gas detector. That the one previously used was not the

best available does not impose liability by itself. Considering the experience and

professional standing of the Coop, Noble, and the decedent, the continuing propane

warnings, and the training about the dangers to all involved, we cannot assume or

speculate in the absence of admissible evidence to the contrary, that the Coop,

Noble, and the decedent did not know of the gas detectors availability.

We understand the good efforts of the estate in trying to make its case, but

mere arguments cannot defeat an order of summary judgment fully supported by the

law and the facts of record, even when viewed in the light most favorable to the

estate. The facts support only one conclusion. See, e.g., McDonald v. McNeil Lab.,

Inc., 241 N.W.2d 822, 828 (Neb. 1976) (holding that where there is no essential

conflict as to the facts and the evidence, the trial court was correct in refusing to

submit the theory of strict liability to the jury). There are no triable issues of fact

left to remand for jury determination.

III. CONCLUSION

The district court’s order of summary judgment in favor of defendants is

AFFIRMED. The parties shall bear their own costs.

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A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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